Loan Guarantee Program Helps Only A Few Producers

“We do hear from farmers on both sides of that.”

– IAN WISHART, KAP

Canadian pork producers are calling a federally backed industry assistance program a flop after the government ended up spending just two-thirds of the money it originally committed.

Ottawa put up only $270 million of the $400 million in federal loan guarantees promised under the Hog Industry Loan Loss Reserve Program aimed at restructuring massive producer debt resulting from a major industry downturn over the last three years.

It was hoped the $400 million government backstop would encourage bankers to help financially ravaged producers by restructuring existing short-term debt into long-term loans to be paid out over 15 years.

Bankers said few farmers bothered to apply, while producers accused lenders of too often turning them down flat.

Fewer than 300 pork producers across Canada actually qualified for long-term debt restructuring under the HILLRP program, producers attending last week’s Manitoba Pork Council annual meeting heard.

But the program was confusing from the start, with uncertainty about who was eligible, what lending institutions were

participating and what information was required from producers, Jurgen Preugschas, Canadian Pork Council president, told the meeting.

PLANS UNACCEPTABLE

Producers presenting future business plans to qualify for extended loans often complained the banks wouldn’t accept them.

“I’ve certainly talked to farmers who had gone to financial institutions with pretty good packages and been turned down,” said Ian Wishart, Keystone Agricultural Producers president.

But Wishart said he also heard from farmers who decided not to apply because the last thing they needed was more debt.

“We do hear from farmers on both sides of that.”

Preugschas later called lenders’ claims that not enough farmers applied “absolute BS.”

Ottawa and the industry had hoped federal guarantees would encourage lenders to offer favour-able interest rates. But Preugschas said producers often found the rates banks were willing to give were higher than for regular loans.

UNWILLING TO LEND

Menno Bergen, a Plum Coulee producer, said two different institutions told him they weren’t willing to lend him money for hogs. Farmland yes, hogs no, Bergen told the meeting.

Preugschas said CPC wants Ottawa to direct the remaining $130 million in uncommitted HILLRP funds to the industry in another way. Federal Agriculture Minister Gerry Ritz has asked for suggestions.

A second program to help producers exit the industry for at least three years was more successful, Preugschas said.

The $75-million Hog Farm Transition Program allowed producers to bid for money as compensation for emptying their barns. Four tenders were conducted between November 2009 and March 2010. There were 432 successful bids which spent $71.7 million to remove 137,022 sows, as well as weanling pigs and market hogs, said Preugschas.

CPC expects the full $75 million will be spent after adjustments are made. [email protected]

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